Warm-up to Hub17: Talking employee engagement with Ray Wang of Constellation Research

I’ve known Ray Wang, Principal Analyst and Founder of Constellation Research, for many years and enjoyed attending the annual Constellation Connected Enterprise event featuring the leading thinkers and innovators in enterprise technology. I’ve always found Ray to be a great strategic thinker who can connect disruptive technologies and other big-picture concepts—not just to our work lives, but to our everyday lives.

Folia: We hear that employee engagement is critical to success in the digital era, but the concept is ill-defined. So let’s start with the basics: What is employee engagement and how does it impact the bottom-line?

Ray: Employee engagement is about having talent that is excited.

For the employer, engagement starts with your talent or talent requirements, matches them with the self-interest of employees, and ties it all back to the customer’s point of view. For example, if you’re in retail, an engaged employee will be super-friendly, super-knowledgeable about the product, and will know how to close a deal in a way that makes the customer happy. Understanding employee engagement helps you find the right people, give those people the right opportunities, and give customers what they want in today’s digital world. The goal is to humanize the digital experience in the last mile.

When we look at employee engagement at Constellation Research, we find that engaged workforces generate anywhere from 21 to 37 percent more revenue, create higher customer satisfaction, and typically drive two or three more points in Net Promoter Score. All of these things are very important to the bottom line.

Folia: Is employee engagement different for the incoming workforce, who are just getting started in their careers? Particularly with regard to the way they use technology?

Ray: Not really. There are two aspects of technology that we, as employers, need to think about when it comes to employee engagement: To help people understand a technology, and then to let them use it. Age is not as important as digital proficiency—it’s not age-class warfare. Walk into any retirement home and you’ll find digital natives in their 70s and 80s, sharing photos on their tablets and bothering their kids at work for technical support.

Folia: What do you mean by “digital natives”?

Ray: That’s a phrase Constellation coined to describe one of five generations of digital workers we see. The generations aren’t based on age, but on digital proficiency: Digital natives are happy to go into digital mode first. They use their devices first and foremost. Now, if you jot notes down on paper and then input them onto a device, you’re a digital immigrant. And if you take a picture of your notes and send it to yourself, you’re doubly a digital immigrant. I draw all my slides on paper before I put them in PowerPoint; that makes me a digital immigrant.

The next category is we call digital voyeurs. These folks are excited about the technology and they understand it, but they are not ready to jump in. They don’t want to use a technology yet, but they are not against it.

Then there are the folks we call digital holdouts. They don’t care for the technology, they don’t want to be close to it and are happy being ignorant about it. And then the last category, the digitally disengaged, is different. Many times, they were the early adopters who were first at everything—they would show you the newest apps, they thought everything was great. But now they are paying for things with cash and using burner phones because they are afraid of the ramifications of digital privacy.

Folia: The people who use Anaplan every day, our users, tell us that technology is important for engagement—for example, the finance teams who used to spend their days aggregating data in spreadsheets are overjoyed when they get to spend time doing analysis and providing valuable advice to the business. They feel more engaged. But the question I have for you is: Why should an employer care about employee engagement?

Ray: Like I noted earlier, engaged workforces generate more revenue and create happier customers. And just as important, engaged employees are more likely to stick around. It’s really expensive to lose an employee—sometimes 1–2x more expensive to lose someone and rehire than to retain a person. The attrition process is hard on a team, and you lose a lot of institutional knowledge. That’s why massive attrition—in the startup world you could see anywhere between 20 and 40 percent attrition—gets so expensive. You really have to consider the attrition impact of not having engaged employees.

Folia: So giving employees cool technology to work with helps reduce attrition?

Ray: Yes, but technology is only one tool for engagement, and it can’t make employees engaged on its own. Employee engagement works when an organization taps into the needs, wants, and self-interests of employees, and aligns those with the interests of the employer, like your example of the finance people who want to do analysis.

You don’t just walk up to someone and say, “Hey, I want you to be engaged.” It doesn’t work that way. Engagement requires an employer to be contextually relevant, and to give people options in the way that they want to be reached. Some people prefer software, and some people prefer face-to-face meetings, while others like to have a combination—and that’s why it’s important to think about collaboration technology and how messages are delivered. So technology is the first piece.

And then the second piece is the content itself. If you push information to people that’s not relevant to them, they just ignore you. So learning to be contextually relevant—while not being creepy on privacy—is the balance employers have to think about. One person’s hyper-personalization could be another person’s creepy.

Folia: So then, apart from technology and content, what are the most powerful levers that employers have to affect employee engagement?

Ray: There are a few. We see three modes employers use to engage their people: monetary, non-monetary, and consensus. The first one, monetary, is pretty obvious: We will pay you to be engaged, either directly and indirectly. The third, consensus, is kind of informal. Where we get general agreement about things before we act, employees are more engaged.

The second mode, non-monetary, gets more interesting. I see three sub-categories here: recognition, access, and influence. Recognition we know; it’s saying, “Hey, you’ve done an awesome job. We really appreciate all the work that you have done. You are the employee of the week.” Access is a little bit different: It’s saying, “You did such a great job, we want you to sit down with the CEO for breakfast,” or having a Special Ops team where you only choose one person from each department. And then there is influence, which is saying, “We are doing a new program and we really want your opinion. We’re only asking three people in the company for input.” You can’t pay for this stuff. It’s not monetary. But we actually think the non-monetary modes are the more powerful levers for employee engagement.

Folia: We’ve talked about how the tools we use in our work contribute to our engagement as employees. Can the tools also help organizations understand and engage with their employees?

Ray: They’re really important. A big component of workforce planning is what we talked about at the beginning of this conversation: The ability to think about your needs from a talent perspective, your customer’s perspective, and your employees’ perspective.

It’s not just about understanding the rules; it’s understanding the personas that are important. You’re looking for trends in how you hire and trends in your ability to deliver on the capabilities that your customers are looking for. You’re also trying to address issues around talent and retention and training. Employee engagement is one signal—among many—in helping to create a better work environment.

Folia: Now it’s time to get out the crystal ball. What other technologies are going to affect employee engagement in the future?

Ray: Artificial intelligence (AI) is going to be important and relevant to employee engagement in coming years. AI is going to play a bigger role in employee engagement because, when we apply a certain level of machine learning to processes, we are able to augment humanity. By augmenting our ability to make better decisions more quickly, we are actually helping to democratize decision-making and improve the input process, which moves us from employee engagement to employee empowerment. AI will help us ensure that everybody has access to the right information at the right time so they can make better decisions.

The conversation continues at Hub17. Ray and I will explore employee engagement and bring some people to the stage whose lives have been transformed by working with Anaplan.

Hub17 is March 27–29 in San Francisco, and my presentation with Ray will be during the free general session on March 28, so don’t miss it! Register today.